By Evan Condran, CPA, POPM, Director of Product Management
In response to final amendments to the FAST Act Modernization and Simplification of Regulation S-K approved by the SEC on March 20th, 2019, the SEC’s EDGAR software was updated to version 19.2 on June 10th, 2019.
The final amendments to the FAST Act required updates to the EDGAR Filer Manual (version 51), 2019 Document and Entity Information (DEI) Taxonomy, and the EDGAR software which validates test and live submissions as they are processed.
Additionally, EDGAR no longer supports the 2017 U.S. GAAP, 2016 Currency, 2014 DEI, and 2017 Exchange Taxonomies.
Finally, EDGAR now supports the 2019 International Financial Reporting Standards (IFRS) Taxonomy. For a complete list of EDGAR supported taxonomies, click here.
Why did the EDGAR Filer Manual need to be updated?
The EDGAR Filer Manual was updated to:
- Add five new SEC transformations for certain cover page disclosures; and
- Add nine rules to detail requirements for cover page elements and facts for various form types.
What is EDGAR?
EDGAR, which stands for Electronic, Data, Gathering, Analysis and Retrieval, is the SEC’s system for filers to submit test and live submissions which are then posted on the SEC website for public review.
What changes were included in the 2019 DEI Taxonomy?
The 2019 DEI Taxonomy includes 24 new elements to tag cover page data. Among other things, the FAST Act now requires all cover page data to be in inline XBRL (iXBRL) format for SEC Forms 8-K, 10-Q, 10-K, 20-F and 40-F. Prior to this rule, Form 8-K only required XBRL exhibits in certain rare instances where a complete set of financial statements and footnotes were included in the submission, and Forms 10-Q, 10-K, 20-F and 40-F only required certain cover page data to be tagged in accordance with EDGAR Filer Manual rules.
The FAST Act now requires filers to disclose on the cover of Form 10-Q the name of each exchange on which a class of security is registered. There was no element in the 2018 DEI taxonomy for this disclosure, as there was no such disclosure requirement. One of the 24 elements added in the 2019 DEI Taxonomy is Security Exchange Name, which is an enumerated type element that allows XBRL fact values such as NYSE or NASDAQ.
Filers who do not adopt the 2019 DEI Taxonomy and must comply with iXBRL requirements and the new FAST Act amendments will need to extend elements to tag these disclosures, as certain elements do not exist in the 2018 DEI Taxonomy.
When must I adopt the 2019 DEI Taxonomy?
The FAST Act amendments are effective May 2nd, 2019 but are following the same phase-in schedule as the final rule requiring Inline XBRL data. Therefore, filers with Large Accelerated Filer status filing in U.S. GAAP with a quarterly report with a fiscal period ending on or after June 15, 2019 must comply with the cover page tagging requirements.
Any subsequent current report on Form 8-K would require the cover page to be in iXBRL format.
The EDGAR Software Update 19.2 includes validation checks to ensure the requirements for tagging cover page data are valid and comply with version 51 of the EDGAR Filer Manual. Therefore, any attempts to comply with these requirements using the 2018 DEI Taxonomy may result in test and live submissions with EDGAR warnings.
What does the SEC recommend?
The SEC staff strongly encourages companies to use the most recent version of the relevant taxonomy for their Interactive Data submissions to take advantage of the most up-to-date tags related to new accounting standards and other improvements.
What are the five new SEC transformations?
EDGAR Filer Manual version 51 includes five new SEC transformations:
- ixt-sec:exchnameen - Transforms EDGAR English exchange names into their respective exchange codes. Initial character of each word may be upper or lower case.
- ixt-sec:stateprovnameen - Transforms English state/province names into ISO 3166 2-character codes. Initial character of each word may be upper or lower case.
- ixt-sec:countrynameen - Transforms English country names into ISO 3166 2-character codes. Initial character of each word may be upper or lower case.
- ixt-sec:edgarprovcountryen - Transforms English province or country names into 2-character codes specified in Appendix A of EDGARLink Online XML Technical Specification (https://www.sec.gov/info/edgar/specifications/edgarlinkonlinexml.htm). Initial character of each word may be upper or lower case.
- ixt-sec:boolballotbox - Transforms the Unicode empty ballot box character "☐" into "false", and both checked "☑" and x'ed "☒" ballot box characters into "true".
Each of these transformations were added to support transforming a source value to an XBRL fact. For example, tagging the source value Nebraska with the DEI element Entity Address, State or Province with the ixt-sec:stateprovnameen transformation would have a valid XBRL fact value of NE. If the filer had NEBRASKA in all caps as the source value, the transformation would fail because the transformation only supports the initial character being capitalized, resulting in an EDGAR warning.
What are transformations?
A transformation is an iXBRL element used to translate a source value to an appropriate XBRL fact value. For example, Security Exchange Name only allows certain fact values, such as NYSE. However, filers often will disclose this on the cover page with a source value of The New York Stock Exchange.
In EDGAR Filer Manual version 51, the SEC added a transformation for the specific disclosure of the element Security Exchange Name, ixt-sec:exchnameen. If the filer tags the source value and does not use the SEC transformation identified in the EDGAR Filer Manual, the result will be an SEC warning that the item is in in ix:hidden and is eligible for transformation.
What is ix:hidden?
The ix:hidden section is a specific area of the iXBRL document that contains XBRL facts where there was no transformation from the source value to the XBRL fact. This can occur for a couple of different reasons:
- If a filer discloses information that is not in a supported transformation format.
- For example, if a filer reports a date of June 2019 and tags this with a date item type element, the format requires CCYY-MM-DD. For an XBRL filing, we would apply an alternative tagging value and work with the filer to determine the specific day to achieve the required format. However, for iXBRL, since the filer does not disclose the specific day on the source, the transformation would fail and the fact would go to ix:hidden, resulting in an EDGAR warning.
- If a filer discloses an XBRL fact that does not exist in the source document.
- For example, when a filer reports an XBRL fact and there is no associated source value. Due to software limitations, some filers may not be able to tag parenthetical values in line items on the financial statements which means the XBRL fact will not be visible in the iXBRL document. This will result in an EDGAR warning.
What are some examples of cover page data that will now be required for iXBRL?
Form 10-Q will have approximately 15 more cover page data points, depending on the number of classes of stock traded on an exchange. Examples of disclosures that will now be required as XBRL facts include the address line, area code, local phone number, title of each class of stock, trading symbol, and security exchange name.
What can you do to prepare for these changes?
- Understand where your company falls within the phase-in requirements.
- If you are a Large Accelerated Filer, you need to act fast, as the effectiveness of the new disclosure requirements is only weeks away.
- If you are not a Large Accelerated Filer, you have more time to learn and prepare for the requirements; you may even choose to early adopt so you are completely prepared when the new disclosure requirements become applicable to your company.
- Share the news with your internal teams, such as your legal team which may perform Form 8-K functions, so that you can plan and implement a process to meet these requirements.
- Contact your software/service provider to discuss options available for compliance.
- Perform any necessary updates and submit a test submission well in advance of the live submission. This will allow you to evaluate and address any errors and warnings with time to understand and resolve prior to filing.
At Certent our team works side-by-side with our customers to ensure their disclosures are compliant with taxonomy changes an regulatory updates. Want to learn more about how we can help you too? Speak with us today!